BUSINESS ORGANIZATIONS CODE
TITLE 7. PROFESSIONAL ENTITIES
CHAPTER 301. PROVISIONS RELATING TO PROFESSIONAL ENTITIES
§ 301.001. APPLICABILITY OF TITLE. (a) This title
applies only to a professional entity or foreign professional
entity.
(b) This title does not affect:
(1) the professional or confidential relationship
between a person who provides a professional service and the
recipient of that service; or
(2) a person's legal remedies against another person
who commits an error, omission, negligent or incompetent act, or
malfeasance while providing a professional service.
(c) This title does not apply to partnerships or limited
liability partnerships.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 301.002. CONFLICTS OF LAW. This title prevails over a
conflicting provision of Title 1, 2, or 3.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 301.003. DEFINITIONS. In this title:
(1) "Licensed mental health professional" means a
person, other than a physician, who is licensed by the state to
engage in the practice of psychology or psychiatric nursing or to
provide professional therapy or counseling services.
(2) "Professional association" means an association,
as distinguished from either a partnership or a corporation, that
is:
(A) formed for the purpose of providing the
professional service rendered by a doctor of medicine, doctor of
osteopathy, doctor of podiatry, dentist, chiropractor,
optometrist, therapeutic optometrist, or licensed mental health
professional; and
(B) governed as a professional entity under this
title.
(3) "Professional corporation" means a corporation
that is:
(A) formed for the purpose of providing a
professional service that by law a corporation governed by Title 2
is prohibited from rendering; and
(B) governed as a professional entity under this
title.
(4) "Professional entity" means a professional
association, professional corporation, or professional limited
liability company.
(5) "Professional individual," with respect to a
professional entity, means an individual who is licensed to provide
in this state or another jurisdiction the same professional service
as is rendered by that professional entity.
(6) "Professional limited liability company" means a
limited liability company formed for the purpose of providing a
professional service and governed as a professional entity under
this title.
(7) "Professional organization," with respect to a
professional corporation or a professional limited liability
company, means a person other than an individual, whether
nonprofit, for-profit, domestic, or foreign and including a
nonprofit corporation or nonprofit association, that renders the
same professional service as the professional corporation or
professional limited liability company only through owners,
members, managerial officials, employees, or agents, each of whom
is a professional individual or professional organization.
(8) "Professional service" means any type of service
that requires, as a condition precedent to the rendering of the
service, the obtaining of a license in this state, including the
personal service rendered by an architect, attorney, certified
public accountant, dentist, physician, public accountant, or
veterinarian.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 301.004. AUTHORIZED PERSON. For purposes of this
title, a person is an authorized person with respect to:
(1) a professional association if the person is a
professional individual; and
(2) a professional corporation or a professional
limited liability company if the person is a professional
individual or professional organization.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 301.005. APPLICATION FOR REGISTRATION OF FOREIGN
PROFESSIONAL ENTITY. (a) When required by Chapter 9, a foreign
professional entity must file an application for registration to
transact business in this state.
(b) The secretary of state may accept an application filed
under Subsection (a) only if:
(1) the name and purpose of the foreign professional
entity stated in the application comply with this title and
Chapters 2 and 5; and
(2) the application states that the jurisdiction of
formation of the foreign professional entity permits reciprocal
admission of an entity formed under this code.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 301.006. LICENSE REQUIRED TO PROVIDE PROFESSIONAL
SERVICE. (a) A professional association or foreign professional
association may provide a professional service in this state only
through owners, managerial officials, employees, or agents, each of
whom:
(1) is a professional individual; and
(2) is licensed in this state to provide the same
professional service provided by the entity.
(b) A professional entity, other than a professional
association, may provide a professional service in this state only
through owners, managerial officials, employees, or agents, each of
whom is an authorized person.
(c) An individual may not, under the guise of employment,
provide a professional service in this state unless the individual
is licensed to provide the professional service under the laws of
this state.
(d) This section may not be construed to prohibit a
professional entity or foreign professional entity from employing
individuals who do not, according to general custom and practice,
ordinarily provide a professional service, including clerks,
secretaries, bookkeepers, technicians, nurses, or assistants.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 301.007. CERTAIN REQUIREMENTS TO BE OWNER, GOVERNING
PERSON, OR OFFICER. (a) A person may be an owner of a
professional entity or a governing person of a professional limited
liability company only if the person is an authorized person.
(b) An individual may be an officer of a professional entity
or a governing person of a professional association or professional
corporation only if the individual is a professional individual.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 301.008. DUTIES AND POWERS OF OWNER OR MANAGERIAL
OFFICIAL WHO CEASES TO BE LICENSED; PURCHASE OF OWNERSHIP
INTEREST. (a) A managerial official of a professional entity who
ceases to satisfy the requirements of Section 301.007 shall
promptly resign the person's position and employment with the
entity.
(b) An owner of a professional entity who ceases to be an
authorized person as required by Section 301.007 shall promptly
relinquish the person's ownership interest in the entity.
(c) A person who succeeds to the ownership interest of an
owner shall promptly relinquish the person's financial interest in
the entity if the person is not an authorized person as required by
Section 301.007.
(d) A professional entity shall purchase or cause to be
purchased the ownership interest in the entity of a person who is
required to relinquish the person's financial interest in the
entity under this section. The price and terms of a purchase of an
ownership interest required under this subsection may be provided
by the governing documents of the entity or an applicable
agreement.
(e) A person who owns all of the outstanding ownership
interests in a professional entity but is required under this
section to relinquish the person's financial interest in the entity
may act as a managerial official or owner of the entity only for the
purpose of winding up the affairs of the entity, including selling
the outstanding ownership interests and other assets of the entity.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 301.009. TRANSFER OF OWNERSHIP INTEREST. Except as
limited by the governing documents of the professional entity or an
applicable agreement, an ownership interest in a professional
entity may be transferred only to:
(1) an owner of the entity;
(2) the entity itself; or
(3) an authorized person.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 301.010. LIABILITY. (a) A professional entity is
jointly and severally liable for an error, omission, negligent or
incompetent act, or malfeasance committed by a person who:
(1) is an owner, managerial official, employee, or
agent of the entity; and
(2) while providing a professional service for the
entity or during the course of the person's employment, commits the
error, omission, negligent or incompetent act, or malfeasance.
(b) An owner, managerial official, employee, or agent of a
professional entity other than an owner, managerial official,
employee, or agent liable under Subsection (a) is not subject to the
same liability imposed on the professional entity under this
section.
(c) If a person described by Subsection (a) is a
professional organization, the professional organization and the
professional entity are jointly and severally liable for the error,
omission, negligent or incompetent act, or malfeasance committed by
the person, or the person's owner, member, managerial official,
employee, or agent, while providing a professional service for the
professional entity.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 301.011. EXEMPTION FROM SECURITIES LAWS. (a) A
sale, issuance, or offer for sale of an ownership interest in a
professional entity to a person authorized under this title to own
an ownership interest in the professional entity is exempt from any
state law, other than this code, that regulates the sale, issuance,
or offer for sale of securities.
(b) A transaction described by Subsection (a) does not
require the approval of or other action by a state official or
regulatory agency authorized to regulate the sale, issuance, or
offer for sale of securities.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 301.012. JOINT PRACTICE BY CERTAIN
PROFESSIONALS. (a) Persons licensed as doctors of medicine and
persons licensed as doctors of osteopathy by the Texas State Board
of Medical Examiners and persons licensed as podiatrists by the
Texas State Board of Podiatric Medical Examiners may jointly form
and own a professional association or a professional limited
liability company to perform professional services that fall within
the scope of practice of those practitioners.
(b) Professionals, other than physicians, engaged in
related mental health fields such as psychology, clinical social
work, licensed professional counseling, and licensed marriage and
family therapy may form a professional entity that is jointly owned
by those practitioners to perform professional services that fall
within the scope of practice of those practitioners.
(c) Persons licensed as doctors of medicine and persons
licensed as doctors of osteopathy by the Texas State Board of
Medical Examiners and persons licensed as optometrists or
therapeutic optometrists by the Texas Optometry Board may, subject
to the provisions regulating those professionals, jointly form and
own a professional association or a professional limited liability
company to perform professional services that fall within the scope
of practice of those practitioners.
(d) Only a physician, optometrist, or therapeutic
optometrist may have an ownership interest in a professional
association or professional limited liability company formed under
Subsection (c).
(e) An entity formed under Subsection (c) is not prohibited
from making one or more payments to an owner's estate following the
owner's death under an agreement with the owner or as otherwise
authorized or required by law.
(f) When doctors of medicine, osteopathy, and podiatry, or
doctors of medicine, osteopathy, and optometry or therapeutic
optometry, or mental health professionals form a professional
entity as provided by Subsections (a), (b), and (c), the authority
of each of the practitioners is limited by the scope of practice of
the respective practitioners and none can exercise control over the
other's clinical authority granted by their respective licenses,
either through agreements, bylaws, directives, financial
incentives, or other arrangements that would assert control over
treatment decisions made by the practitioner.
(g) The state agencies exercising regulatory control over
professions to which this section applies continue to exercise
regulatory authority over their respective licenses.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
